MDHE Default Prevention Grant Proposal

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3 MDHE Default Prevention Grant Proposal Missouri Western State University is seeking renewal of the Missouri Department of Higher Education default prevention grant for the upcoming state fiscal year (SFY) I. Summary of Previous Plans Missouri Western State University initiated a default prevention plan by hiring a part-time Default Prevention Coordinator position in the Financial Aid Office in May of The primary responsibility of this position was to contact delinquent student loan borrowers and provide them with information that would prevent them from defaulting on their student loans. Lack of funding and support prohibited the position and plan from fully developing until Western was able to receive the MDHE Default Prevention Grant. Since receiving the grant, Western developed a more comprehensive default prevention plan and hired a full-time Default Prevention Coordinator in the Financial Aid Office. The primary purpose of this position is to build relationships with student loan borrowers and assist them throughout their college career at Western and through repayment of their student loan debt. The Default Prevention Coordinator continues to be available for individual counseling for not only entrance and exit loan counseling, but for other areas of concern such as financial problems, personal problems, satisfactory academic progress, and the problems associated with the transition to college life. The Default Prevention Coordinator serves as a liaison to direct students to special services they may need such as help with advisement, personal counseling, or tutoring. The Default Prevention Coordinator continues to work closely with the Student Services Department on campus to identify at risk students that need to receive one-on-one academic, financial, and personal advising. Through attendance verification records and close contact with key faculty members, the Default Prevention Coordinator assists with tracking down students who have stopped attending their courses and works with the Student Services Office to get these students back in class. The Default Prevention Coordinator presents seminars on financial aid and debt management during College 101 courses each semester. The Default Prevention Coordinator coordinates the campus Satisfactory Academic Progress procedures, ensuring contracts are signed and that at risk students receive the additional services and information that they need in an individual meeting with appropriate staff members. The intent is to ensure students understand the policy, review their options, develop their educational goals and modify their behaviors to assist them in achieving their goals. The Default Prevention Coordinator stresses the importance of going to class, utilizing the Center for Academic Support, and coming to the Financial Aid office or the Student Service s office if they need help with anything. At risk students are required to sign the academic plan that is developed to

4 acknowledge their understanding that they may be denied future financial assistance if they do not stay on track. The Default Prevention Coordinator works closely with the Director of the Developmental Math and English programs to monitor student attendance and participation of students enrolled in remedial math and English courses. Over the course of the past couple of years - we have discovered that those students who are struggling in these courses, especially those who are not attending regularly are more likely to drop out or flunk out of all of their courses. The Default Prevention Coordinator also works closely with Western s Special Needs Coordinator, Non-traditional Student Center, and the Registrar s Office to make special accommodations for students when needed. Students who are identified as having attendance problems are contacted by the Default Prevention Coordinator and/or other Western staff members to provide intervention and encouragement to improve class attendance and participation. The Default Prevention Coordinator is responsible for providing exit loan counseling information to all students who exit Missouri Western graduates, withdraws, suspensions, and non-returning. The Default Prevention Coordinator places holds on academic transcripts until exit loan counseling is completed. The Default Prevention Coordinator and student workers call and students scheduled to graduate each semester to ensure that exit loan counseling is complete and to answer any questions that students may have. Western will begin utilizing the MDHE Be a Smart Borrower folders for the Academic Year to encourage students to keep their student loan paperwork and contact information together. Western monitors student withdraws daily and notifies loan coordinators for loan cancellations. Western s withdraw procedures requires students to go through a check-out process in which the business office and financial aid office must sign off on the student s withdraw form before the student is allowed to officially withdraw from Western. This allows the student to receive needed information before they finalize their decision to leave. Western continues to find success in retaining several students each semester by directing the student to the appropriate resources available to them such as free tutoring or personal counseling. This process also allows the Default Prevention Coordinator to have an additional opportunity to provide one-on-one loan counseling. Students that are transferring to another institution receive assistance with completing the in-school deferment form; updating their FAFSA to include the new institution s college code; as well as information regarding interest rate benefits or consolidation if the student is going to have multiple loan holders. Students also receive a letter from the Default Prevention Coordinator when they enter their grace period reminding them of their student loan obligations. In addition to the above, the Default Prevention Coordinator obtains lists from lenders, guarantee agencies, and secondary markets of Missouri Western borrowers who are in arrears. Individuals who are less than 60 days delinquent receive a letter reminding the student of their student loan obligations and that the staff at Western is still available to assist them. Individuals that are 90 days or more delinquent receive information packets with materials about deferments, forbearances, and contact information for their loans. Should a student default on their student loans, the Default Prevention Coordinator sends the student an information packet with details on how to bring their account in good standing and information describing the consequences of defaulting. Students with multiple loans often with different servicers get confused and lost in paperwork. They do not realize that they must make multiple payments with different loan holders or even with the same loan holder in the case of alternative loans. The Default Prevention Coordinator is able to intervene 2

5 and assist the student in contacting all of the appropriate entities to either help the student make satisfactory payment arrangements, apply for deferments, or consolidate their loans. The Default Prevention Coordinator along with other financial aid staff members conduct numerous financial aid workshops and seminars to College 101 courses and various student organizations to help students explore every option for financial assistance before borrowing loan funds. During these workshops students are encouraged to live as poor college students and not borrow just because they can. Students working in the financial aid office have been trained to speak to various audiences about the financial aid application process and smart borrowing. The number of inquiries in regards to student loan repayment with delinquent borrowers continues to be significant. Numerous delinquent borrowers apply for deferment/forbearance, submit payments, or make other satisfactory arrangements with their loan holder after being contacted by the Default Prevention Coordinator. The Default Prevention Coordinator receives many return calls for help with consolidation, deferments, forbearance, or for help getting out of default. Missouri Western has achieved its goal of providing information to borrowers and implementing innovative avenues of reaching students. Western has enhanced our ability to track the number and types of contacts the Default Prevention Coordinator has with students by using category codes in our financial aid management system (BANNER). Specifically, we can better monitor our at risk student contacts through coding of attendance verification, satisfactory academic progress, and special programs such as the Griffon Gateway. Our goals in maintaining and developing the Default Prevention Coordinator position continue to be: provide more comprehensive one-on-one service to student loan borrowers; educate our student population about living on a budget, reducing debt and smart borrowing habits; prevent borrowers from defaulting on their student loan responsibilities; decrease Western s cohort default rate; increase campus involvement in default prevention activities; improve communication to students; and improve student success and retention rates. The addition of the Default Prevention Coordinator has allowed Missouri Western to provide much needed information in a positive and proactive manner to assist delinquent borrowers in avoiding student loan default. It is allowing Western to develop educational opportunities to help students find alternative ways to fund their education and minimize loan debt. Missouri Western has created a neutral, nonthreatening party for students to utilize when they need assistance with repayment of their student loans, and has continued to decrease the number of student loan borrowers defaulting on their loans from Missouri Western. 3

6 Measuring Our Success Although Western experienced a slight increase in our Cohort Draft Default rate this year, when compared to increases at peer institutions, it is evident that Western s and MDHE s efforts is having a positive influence on our student borrowers and minimizing what could be a much worse problem considering the economic conditions facing our region and country. The number of students initiating contact with our office for assistance with their loan obligations and seek out options continues to increase. Western continues to meet our goal of heightening the awareness of the services provided in the financial aid office, educating students in debt management and encouraging smart borrowing, and improving retention efforts. Western once again launched an aggressive campaign on campus this year to push students to meet both scholarship and FAFSA priority deadlines. The number of scholarship applications received more than doubled and the financial aid office generated more than 4,000 award letters during the month of April. Our hope is that students will not only receive more financial assistance through Federal, State, Institutional, and Private sources, but that students and their parents will be able to better budget for their expenses for the upcoming school year. The new Access Missouri Grant is greatly reducing the need for student loans, especially the more expensive private loans that students have been using to fill the gap in their financial aid packages. Western s focus on working with students who are struggling to meet the institution s satisfactory academic progress standards is having an impact. As one young man recently shared with our Default Prevention Coordinator You are the reason that I am graduating. Before I met with you, I did not have a focus. Although I was mad at you for being so hard on me when I left your office, I later realized that you cared and you believed in me. I used the information that you gave me as a guide and turned things around and reach my goals. This student was an inner city, low income, minority student who went on to explain that he had never had anyone take the time or care enough to make him accept responsibility for his future. This student is only one of many success stories that our Default Prevention Coordinator has been able to reach and assist. II. Renewal Proposal Missouri Western plans to continue our current default prevention plan by retaining the Default Prevention Coordinator position with the MDHE Default Prevention Grant of $18,750 and providing matching funds of at least $6,250. The principal duties of this individual will continue to be: 1. To monitor student withdraws daily and notify loan coordinators for adjustments or cancellations. 2. To provide required exit loan counseling information, as well as MOHELA s Loan Repayment Options booklet and automatic payment authorization agreements to all students leaving Missouri Western withdraws, graduates, suspensions, non-returning. Assist students completing the online exit counseling provided through Mapping-Your-Future. Place exit holds on academic transcripts until exit counseling is completed. 4

7 3. Review student rosters for changes in enrollment activity. 4. To send notifications to students who exit Western reminding them of their grace period and responsibilities to repay their student loans, as well as options should they be unable to make their payments. 5. Continue to obtain lists from lenders, guarantee agencies, and secondary markets of Missouri Western borrowers who are in arrears. 6. Continue to track the number of students assisted by the Default Prevention Coordinator and the number of students that are prevented from going into default. 7. Continue to review the Draft Cohort Default report on an annual basis and submit challenges when appropriate. 8. Because students failing to make satisfactory academic progress are the largest group of students defaulting on their student loans, Western will continue to work very closely with this population of students. The Default Prevention Coordinator will continue to coordinate and oversee the Satisfactory Academic Progress standards of students, making recommendations for improvements in policies and procedures to improve the success and retention of students. Students will continue to sign a contract that indicates they are on SAP probation and that they are not allowed to receive any grade below a C or withdrawal from any of their courses while on probation. 9. During the Fall 2006 semester, Western implemented a special placement program called the Griffon Gateway. Students who have an ACT composite score of less than 16 and rank in the bottom half of their high school graduating class are not allowed to enroll at Western as a fulltime student. They are only allowed to enroll in specific courses and must meet minimum academic standards before they are allowed to enroll in subsequent terms. These students are monitored closely by special advisors to help ensure their success. Western is committed to ensuring all students have an opportunity to higher education regardless of their previous academic history, academic test scores, or economic backgrounds. This new program should help improve retention and graduation rates of our under-prepared students. Our academic Deans are monitoring the success rates of our Fall 2006 and subsequent cohorts entering the Griffon Gateway Program to determine if the program improves success rates. The Default Prevention Coordinator will monitor and track financial aid packages and loan indebtedness of this population. 10. Financial Aid staff will continue to conduct workshops and seminars to students enrolled in College 101 courses and stress budgeting and smart borrowing. 11. Continue to enhance publications and improve communication and services to our students to ensure students are meeting application deadlines and receiving all of the grant and scholarship funding that they may qualify for. 5

8 12. Educate and encourage students to take advantage of borrower benefit programs available to them through lender partnerships. 13. Promote and encourage students to utilize student employment opportunities to finance educational expenses and reduce the reliance on student loan and credit card debt. Personnel Involved Deana Elder will continue to serve as the Default Prevention Coordinator and be responsible for the day to day activities associated with Missouri Western s Default Prevention plan. Deana currently reports to Angie Beam, Assistant Director of Financial Aid. Deana and Angie will continue to research best practices to further enhance the default prevention program at Western. Importance for Renewal of Default Prevention Grant Missouri Western has been very fortunate to have received the Default Prevention Grant for the past six years. In 1998, Western s cohort default rate was 13.7%. The draft rate for Western released earlier this year is 5.8%. The decrease in the default rate quantifies the importance of initiatives that the MDHE Default Prevention Grant helps fund. Not only has the grant helped Western lower our default rate, it has allowed us to help many of our students and borrowers avoid the consequences of default. Missouri Western s Default Prevention Grant is essential in assisting the Financial Aid Office to continue to assist our borrowers and quantify the importance of a strong default prevention plan. Budget cuts at the State level during the past several years led to conservative measures on campus and departments must continue to justify resource allocation. The success experienced while receiving this grant justified the need for a full-time coordinator position in the financial aid office to administration and other parties on campus. The Default Prevention Grant allowed for the creation of a staff position in the Financial Aid Office that focuses their attention on assisting students avoid default by building relationships and providing information to them. The responsibilities and time commitment of this position have grown to a point in which additional help is needed to maintain the current level of service. The Default Prevention Coordinator has been assigned a student worker to assist with clerical functions. As an open admission institution, Western experiences many unique challenges trying to serve a growing number of under-prepared students. These challenges begin with developing and offering the right mix of services such as remedial courses and adequate tutoring resources to help these students be successful. Even with support services in place, many under-prepared students are not going to successfully complete their degree program which we know will increase their likelihood of becoming delinquent and ultimately defaulting on their loan obligations. An even bigger challenge, however, is finding enough financial resources for these students to cover educational expenses without relying primarily on student loans. Unfortunately, our most under-prepared students are relying on the maximum student loans allowed and still fall short of covering their full cost. This population of students will become a higher priority in our default plan over the next couple of years. 6

9 Receiving this grant has allowed the office to develop a default prevention plan and awareness that is proactive. Staff members in the Financial Aid Office have had the opportunity to raise awareness of financial aid issues and concerns and solicit the support and assistance from many others on campus. Renewal of the MDHE Default Prevention Grant will help to ensure continued support for the staff and resources at Missouri Western to continue and expand our default prevention program. 7

10 Budget: The Financial Aid Default Prevention Coordinator position is classified as an Administrative Assistant position. Minimum qualifications of a high school diploma or equivalent plus specialized training in loan counseling with one to two years experience in a financial institution are required. Preference is given for experience in a college financial aid office. The position reports to the Assistant Director of Financial Aid. The individual in the position is entitled to all college benefits offered to all other full-time employees. The yearly budget for this position consists of: Salary - $29, Fringe Benefits - MOSER $3, Social Security & Med. $2, Health, ADD, & Life Ins. $5, Operating Costs Phone $50 per month $ Postage -@ $50 per month $ Printing & Supply Expenses $1, Total Budget $43, Missouri Western is asking for MDHE to award the full $18,750 renewal of the Default Prevention Grant to help cover the expense of supporting a full-time Default Prevention Coordinator. Western will match all expenses in excess of the $18,750 not covered by the grant. 8

11 MDHE Default Prevention Grant Proposal APPENDIX Charts and Graphs Satisfactory Academic Progress Contract and Letters Satisfactory Academic Progress Advisor Form and Letters Grace Letters for Enrollment Status Change Student Loan Education Pieces Default Assistance Letter 3 pages 3 pages 3 pages 3 pages 3 pages 1 page 9

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15 Satisfactory Academic Progress Contract Student Name Student G# Street Address City State Zip Home Phone Number Alternative Phone Number I, the student understand that I must successfully complete all courses I attempt with a C or higher, and I cannot withdraw from nor audit any courses. I understand that Federal regulations require Western to monitor my progress towards my degree program. I must maintain a 70% completion ratio, 2.0 GPA and complete my degree within the maximum timeframe (186 attempted hours baccalaureate / 93 attempted hours associates). If at any time it becomes evident that I will not be able to complete my degree program within the required timeframe I then become ineligible for Federal Financial Assistance. I, the student understand that this contract is for one probationary semester and that my progress will be reviewed at the end of the semester. To remain eligible, I must successfully complete each course with a grade of C or higher. I understand it is my responsibility to know if a violation in my academic progress has occurred whether or not I receive written notification. I can check my status by going to My Banner and review my status. Please note that academic suspension supersedes financial aid eligibility. Students placed on academic suspension will need to check with the Academic Regulations and Standards Committee regarding the time period of their suspension. We encourage you to set up an appointment with your advisor to discuss your degree requirements, semester class selection, and academic plan to graduate on schedule. If you are unsure of your degree plans consult with the Counseling Center for career planning assistance and with the departments in which you are considering your major. Another great resource is the Center for Academic Support where you can get one on one tutoring. By signing this contract I understand the Academic Policy and agree to the requirements: Signature Date

16 Things to help you improve your success at Western Meet with your Advisor each semester Declare your Major Get a copy of your Major/ Minor form Only take classes needed for your Major Find out requirements to get accepted into your Major Examples: English Majors must take C-Base Nursing Majors must have ACT score of 20 and GPA of 2.5 Business Majors can have no more than 6 hours of D per Major Utilize Student Services to determine your Major Utilize the Center for Academic Support Services and Tutoring Utilize study groups Consider part-time enrollment if you are working full time or have small children Make sure you have adequate Daycare, Living Arrangements and Transportation Avoid Job complications that conflict with class schedule If you are having personal problems contact the Counseling Center for appointment Never be afraid to ask for HELP Plan ahead Know the DEADLINES! Submit your FAFSA and apply for Scholarships early each academic year Know the Policies If you are having difficulty in a class, talk to your Instructor Go To Class!!!! Remember that it is your responsibility to know your Academic Progress whether or not you receive written notification. Center for Academic Support is located in the Hearnes Center, Rm 213 Phone: Counseling Center is located in Eder Hall, Rm 203 Phone: Student Services is located in Eder Hall, Rm 209 Phone:

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19 PLAN OF STUDY FORM Satisfactory Academic Progress Advisor Appeal Name: Address: Student G#: Phone: In measuring the time frame required for Satisfactory Academic Progress toward a degree, Federal regulations require a student to complete their degree program within 150% of the length of the program. Most students at Western must complete their first undergraduate baccalaureate degree within their first 186 attempted hours. Students seeking the associate degree must complete their program within 93 attempted hours. Advisor: Please list, by enrollment period, all remaining courses required for the completion of the students current degree program. Include the complete course number (e.g. MAT116) and applicable credit value. Term Term Term Course # Credits Course # Credits Course # Credits Total credits Term Total credits Term Total credits Term Course # Credits Course # Credits Course # Credits Total credits Total credits Total credits

20 Term Term Term Course # Credits Course # Credits Course # Credits Total credits Total credits Total credits Expected Date of Graduation: STUDENT CERTIFICATION: I certify that the courses specified are required for the completion of my current degree. Student Signature Date DEPARTMENT/COLLEGE CERTIFICATION I certify that the courses specified are required for the completion of this student s current degree. Certifying Officer s Signature Date Certifying Officer s Printed Name Please not that academic suspension supersedes financial aid eligibility. Students placed on academic suspension will need to check with the Academic Regulations and Standards Committee regarding the time period of their suspension.

21 «MAIL_DATE» «NAME» «STR1»«STR2» «CITY_ST_ZIP» «ID» «INTRO» Federal regulations require institutions to monitor the academic progress of students receiving Federal financial assistance. To remain in compliance, Western must monitor both your grade point average and the time frame required for completion of a degree program. Regulations define the time frame in which a student must complete their course of study as 150% of the length of the program. In order to remain eligible for financial assistance at Western, you must complete: A Bachelor s degree program within 186 attempted hours. You must also successfully complete 70% of the coursework you attempt and maintain a minimum GPA of Our records indicate you have attempted «SAP_CUM_HRS_ATTEMPTED» hours. Attempted hours include hours earned, repeated courses, failed courses, audited courses, hours transferred in, and classes that you have withdrawn from. Students who have attempted between 150 and 186 hours must develop a comprehensive academic plan with their academic advisors and submit a copy of this plan to the Financial Aid Office. The purpose of this plan is to ensure that you will be able to graduate within 186 attempted hours. You will be ineligible for Federal assistance if it is determined that you are unable to complete your degree program within this time frame. It is your responsibility to know if a violation has occurred whether or not you receive written notification. You may check your status by going to My Banner and review your Financial Aid Status. Your financial assistance for the upcoming term will not be finalized or disbursed until you have returned the enclosed Satisfactory Academic Progress Advisor Form. You will only be allowed to enroll in courses listed on this form to receive financial assistance. You will be notified in writing if it is determined that you are no longer eligible for financial assistance. Please contact the Financial Aid Office at (816) if you have any questions. Please not that academic suspension supersedes financial aid eligibility. Students placed on academic suspension will need to check with the Academic Regulations and Standards Committee regarding the time period of their suspension. Sincerely, Missouri Western Financial Aid Office

22 «MAIL_DATE» «NAME» «STR1»«STR2» «CITY_ST_ZIP» «ID» «INTRO» Federal regulations require institutions to monitor the academic progress of students receiving Federal financial assistance. To remain in compliance, Western must monitor both your grade point average and the time frame required for completion of a degree program. Regulations define the time frame in which a student must complete their course of study as 150% of the length of the program. In order to remain eligible for financial assistance at Western, you must complete: A associate s degree program within 93 attempted hours. You must also successfully complete 70% of the coursework you attempt and maintain a minimum GPA of Our records indicate you have attempted «SAP_CUM_HRS_ATTEMPTED» hours. Attempted hours include hours earned, repeated courses, failed courses, audited courses, hours transferred in, and classes that you have withdrawn from. Students who have attempted between 70 and 93 hours must develop a comprehensive academic plan with their academic advisors and submit a copy of this plan to the Financial Aid Office. The purpose of this plan is to ensure that you will be able to graduate within 93 attempted hours. You will be ineligible for Federal assistance if it is determined that you are unable to complete your degree program within this time frame. It is your responsibility to know if a violation has occurred whether or not you receive written notification. You may check your status by going to My Banner and review your Financial Aid Status. Your financial assistance for the upcoming term will not be finalized or disbursed until you have returned the enclosed Satisfactory Academic Progress Advisor Form. You will only be allowed to enroll in courses listed on this form to receive financial assistance. You will be notified in writing if it is determined that you are no longer eligible for financial assistance. Please contact the Financial Aid Office at (816) if you have any questions. Please not that academic suspension supersedes financial aid eligibility. Students placed on academic suspension will need to check with the Academic Regulations and Standards Committee regarding the time period of their suspension. Sincerely, Missouri Western Financial Aid Office

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26 Private Loans Will $10,000 borrowed today really cost $48,000 during repayment? With the rising cost of education and the desire to live a more comfortable lifestyle while attending a college or university more and more students are turning to Private Education Loans to help bridge the gap between the actual cost of education and living expenses and the amount of other financial assistance available to them. Private education loans are often more expensive than Federal student loan programs and have less favorable repayment terms than government loans. The interest rate and fees paid on a private student loan are based on a student s credit score and the credit score of the student s cosigner. Because government loans are cheaper and have better repayment and forgiveness options, it is always best to exhaust Federal Student Loan eligibility before turning to private student loan options. How much interest will a student pay on a $10,000 private loan borrowed as a freshman if you choose to defer all payments until graduation? (Assume loan disbursed Fall 2007) Loan Company Estimated Monthly Payment Number of Payments Total Cost of the Loan Bank of America $ $50, December 2011 EduKey $ , December 2011 NextStudent $ $48, December 2011 ActEducationLoans.com $ $48, December 2011 Discover Financial $ $31, December Services 2011 Wells Fargo $ $40, December 2011 Sallie Mae $ $47, December 2011 Wachovia $29,766 December st payment Interest Rate 13.86% 10.36% 13.59% 13.61% 11.41% 13.87% 12% 8.79% Examples based on highest quoted interest rate. Interest rates may be reduced with credit-worthy co-signer or through other borrower benefits such as 36 on-time payments or auto-debit. It is critical that students understand the interest rates and terms of any student loan before they sign. This is an obligation that will stay with them for the next 20 to 30 years and will affect their ability to purchase homes, vehicles, and other necessities in the future. Students should make payments during summer and holiday breaks, should only borrow what is absolutely necessary and should LIVE LIKE A POOR COLLEGE STUDENT WHILE IN COLLEGE. Options to Avoid reliance on Private Loans Scholarships and Grants Apply for everything. Deadlines are critical. Employment Save as much as possible during summer and holiday breaks. Join Americorps, Peace Corps, or the military. Although this is a serious decision and requires an earnest commitment the long term benefits may be a viable option. Part-time enrollment Permits a student to focus on one or two classes while working full or part time and reduces cost while completing a degree program. Temporary nonenrollment - Can allow a student to save money to meet tuition costs. Attend a local institution - Will allow a student to live at home and save on costly room and board expenses. If managed wisely, student loans can be an investment for the future.

27 Exit Loan Counseling Are You Graduating or Considering Leaving Western? Important Student Loan Reminders Federal regulations require student loan borrowers to complete student loan counseling prior to leaving the institution to ensure borrowers understand all of their rights and responsibilities. If you received Federal Stafford and/or Federal Perkins Loans, you are required to complete two separate loan counseling sessions as the terms of the loans are different. Stafford Loan Counseling may be completed online Perkins Loan Counseling may be completed online (You must call when completed) or visit the University Business Office in Eder Hall Room 104 to complete a hard copy form. Please remember to update your address and contact information in the Registrar s Office or online If you experience any difficulties in repaying your loans, contact your loan holder immediately. There are numerous options available to you including deferments, forbearance, and income sensitive repayment options. The staff in the financial aid office is always available to assist you. Don t Forget to Take Advantage of Rate Relief and Loan Forgiveness Programs Western students who receive their Federal Student Loan funds through partnerships with the Missouri Department of Education and the Missouri Higher Education Loan Authority are eligible for substantial interest rate reduction programs. MOHELA s rate relief program reduces the interest rate on a borrower s loan up to 3%. Payment of the loan via auto-debit is the only requirement to automatically receive an interest rate reduction. The Public Service Reward Program offers MOHELA borrowers reduced student loan interest rates as low as.25% for Missouri teachers, peace officers, first responders, nurses, social services and state employees along with National Guard and Reserve members. For more information contact MOHELA at (800) or Standard Repayment Loan Amount Interest Rate Interest Paid Stafford Loan $12, % $4, Plus Loan $20, % $9, Repayment with Rate Relief Stafford Loan $12, % $2, Plus Loan $20, % $5, Repayment with Public Service Reward Program (PSRP) Stafford Loan $12, % $ Plus Loan $20, % $ Total Savings With Rate Relief With PSRP Stafford Loan $2,685 $4,770 PLUS Loan $4,729 $9,588 # of Payments

28 Dear Borrower: Chances are that you have received information regarding student loan consolidation. Student loan consolidation may be in your best interest if you have loans with multiple loan holders or you are in need of immediate payment relief. Loan consolidation allows you to combine different types of Federal student loans to make repayment more manageable. For example, if you have Stafford loans serviced by more than one servicer such as MOHELA, Sallie Mae, and/or William D Ford Direct you can request that all of your loans be purchased by ONE servicer and have one monthly payment. If payment relief is not needed, loan consolidation is generally not in your best interest. While consolidating your loans will result in lower monthly payments, you will pay substantially more interest overtime. In fact, consolidation may double your total interest expense. Loan consolidation will also result in the loss of federal loan cancellation benefits or borrower benefits offered by your current loan holder. For example, if you are a teacher and consolidate your Federal Perkins Loans with your Stafford loans, you can no longer receive cancellation of your loans if you work in a Title III school. If your loans are currently serviced by MOHELA you forfeit Rate Relief benefits if you consolidate your loans. MOHELA s Rate Relief Program reduces the interest rate on a borrower s loan up to 3%. Payment of the loan via auto-debit is the only requirement to automatically receive an interest rate reduction. The Public Service Reward Program offers MOHELA borrowers reduced student loan interest rates as low as 0.25% for Missouri teachers, peace officers, first responders, nurses, social services and state employees along with National Guard and Reserve members. Consolidation may result in the forfeiture of thousands of dollars in interest savings if your loans are currently serviced by MOHELA. There are other options besides loan consolidation if you are in need of payment relief. Contact your lender and request information on alternative repayment options such as income sensitive or graduated repayments that significantly reduce your payments during the first years of loan repayment. You may also qualify for a deferment or forbearance in which loan payments can be temporarily suspended or drastically reduced (interest only). The most common types of deferments are in-school and unemployment; while the most

29 common form of forbearance granted is for temporary hardship in making monthly payments. Loan delinquency and default may prevent you from making major life purchases (homes, vehicles, etc) in the future. If you are struggling with making your monthly payments CONTACT YOUR LOAN HOLDER and discuss options that are available to you. There are many types of student loan deferments, forbearances, and repayment options available. The important thing is to be proactive and ask for assistance. You may request a deferment/forbearance anytime during the life of your loan. Manage your debt wisely and do not consolidate unless it is in your best interest. If you have any questions or need assistance the financial aid office at Missouri Western is here to help you. Good luck to you! Deana Elder Default Prevention Coordinator (816) elder@missouriwestern.edu Need help locating or monitoring your Federal student loans? National Student Loan Data System - You may get a consolidation loan from the U.S. Department of Education or from any government approved private lending institution. William D Ford Direct Loan Program (800)

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